Anne-Marie Elser

Padua Solutions has appointed joint founder, Anne-Marie Esler, as non-executive director and industry engagement lead, effective 1 January 2026. In her new role, Ms Esler will represent Padua across key industry and community initiatives as the company continues to expand the reach and influence of its end-to-end Advice Generation Platform.

As part of this appointment, Ms Esler will also assume the role of company secretary, supporting Padua’s ongoing engagement with shareholders and investors. She will step down from her current co-CEO position on 31 December 2025.

Anne-Marie Esler co-founded Padua Solutions with Matthew Esler in 2013. Since then the business has grown to nearly 90 employees across two offices, servicing over 100 advice firms and representing an increasingly meaningful share of the adviser market.

In 2025, Padua successfully completed its third capital raise and finalised the acquisitions of Wealth Data and Wealth X. These investments, together with Padua’s continued progress in AI-enabled automation, further strengthen its position as a leader in technology-driven advice production.

Reflecting on her transition, Ms Esler said her new role will allow her to focus more deeply on representing Padua within the industry and broader community, while continuing to support the company’s governance and investor relations.

“I am confident the business’s growth trajectory will remain strong. I look forward to continuing to represent Padua at conferences, industry events, university collaborations and as sponsor of the Women in Wealth Awards, as well as championing the role of women in financial services more broadly.”

Padua Chair, Peter O’Connell, said: “Anne-Marie and Matthew have built Padua into the strong business it is today. Anne-Marie’s continuing role on the board ensures she remains a key adviser to the company, with a particular focus on industry and community engagement – areas the board recognises as critical to Padua’s ongoing success.”

From 1 January 2026, Matthew Esler will assume the position of managing director and CEO.

Matthew Esler

Padua Solutions, an innovation leader in financial advice technology and services has entered into a strategic investment and partnership with WealthX, an Australian fintech redefining digital connectivity between borrowers, brokers, and lenders.

Matthew Esler, co-founder and CEO of Padua Solutions, said through this partnership Padua and WealthX are collaborating to build the first true integration between financial planner and mortgage broker software – creating a unified customer data platform.

“This industry-first integration will reshape how planners and brokers collaborate, accelerate the advice process, and elevate client outcomes across the board,” Mr Esler said.

The move follows Padua’s recently oversubscribed $7 million capital raise – initially targeting $5 million and supported by funds managed by Acorn Capital as cornerstone investor – funds which are being used to drive strategic acquisitions and tech enhancements including digital automation and AI across Padua’s expanding advice ecosystem.

WealthX’s platform functionality includes:

• Leverages the CDR and the open banking framework: Accurately assesses client positions and tracks key drivers in real time, enabling personalised advice at scale and proactive client engagement
• Cashflow and personal finance management: Tracks client-level financial details like cashflow, property, and mortgage data
• Brokerage-in-a-box: A complete, digitally enabled platform for modern mortgage brokers
• Digital loan application: Streamlines loan submissions with intuitive end-to-end digital capabilities

The Padua and WealthX planned integration highlight include:

1. Reduced client data gathering – Both planners and brokers will benefit from less client data duplication
2. Accelerated advice cycle – Faster onboarding for brokers and time to advice for planners
3. Aligned service delivery – Planners and brokers will be operating off the same data
4. Expanded client tools – More comprehensive financial resources accessible through a seamless platform.

Mr Esler said: “This integration creates the foundation for the advice platform of tomorrow – one where advice – not a product – is at the centre, supported by unified data, seamless workflow, and intelligent automation.

“The ability to merge planning and broking into a single source of truth accelerates outcomes and fundamentally shifts how services are delivered. The overwhelming support in our capital raise speaks volumes: the market sees this vision and is responding with confidence.”

Clint Howen, co-founder of WealthX, said: “Planners and brokers already maintain tight referral relationships and many practices already include both services. This integration allows them to truly operate as one, with data flowing between systems, reducing handovers, speeding up decisions, and delivering a significantly enhanced client experience. It’s a game-changer that aligns perfectly with industry direction.”

Matthew Sheehan, investment director at Acorn Capital and director of Padua Solutions, added: “This partnership is emblematic of where the industry is headed – towards more connected, efficient, and advice-centric ecosystems. Integrating planning and broking at the system level changes the competitive landscape, and that is precisely why we continue backing Padua’s vision.”

Matthew Esler

Padua Solutions, a leading innovator in financial advice technology and services, has acquired Wealth Data, Australia’s premier provider of structured adviser and licensee data, superannuation and SMSF insights.

The acquisition follows Padua’s recent successful capital raise, initially targeting $5 million but significantly oversubscribed, closing at $7 million. The capital raise was supported by funds managed by Acorn Capital as cornerstone investor, marking its third investment in Padua Solutions.

Funds from the capital raise will support strategic acquisitions and technology enhancements – including digital automation and AI – to further strengthen Padua’s leadership in tech-enabled financial advice solutions. Wealth Data founder Colin Williams joins Padua Solutions as part of the acquisition, reporting to Rudy Haddad, Padua’s head of data, research & technical advice.

The acquisition significantly enhances Padua’s capabilities in delivering adviser, superannuation, and SMSF insights, directly supporting Padua’s mission in empowering advisers to build stronger futures for more Australians.

Key benefits for Padua’s clients and the broader financial services industry include:

• Enhanced Wealth Insights: Wealth Data provides Australia’s most comprehensive and structured financial adviser and licensee data, superannuation and SMSF insights enabling more targeted, effective adviser support and client engagement.
• Improved Market Intelligence: Access to deeper insights into adviser and licensee, superannuation and SMSF trends supports Padua’s clients better understand market dynamics, enhancing their strategic decision-making and competitive advantage.
• Immediate Client Benefits: Wealth Data’s existing relationships across platforms and institutions will broaden Padua’s client base, offering immediate opportunities for enhanced service delivery and collaboration.
• Increased Industry Influence: By acquiring Wealth Data, Padua reinforces its leadership position and commitment to supporting the advice, superannuation, and SMSF community, fostering a healthier and more informed financial services market.
• Greater Innovation Potential: The integration of proprietary adviser, superannuation, and SMSF insights enables Padua to drive ongoing innovation in data analytics and AI, benefiting advisers and institutions with continuously improving solutions.

Matthew Esler, co-Founder and CEO of Padua Solutions, said, “The acquisition of Wealth Data is a significant step forward in our vision to deliver the most powerful and actionable insights to the financial services industry. Colin Williams and his expertise will significantly enhance our offering and our ability to support our clients’ growth and success. The strong response to our capital raise reflects confidence in our strategic vision, and we look forward to announcing additional acquisitions soon.”

Colin Williams, founder of Wealth Data, added, “Joining Padua presents an exciting opportunity to further enhance how our data insights drive positive outcomes in financial advice and financial services. Together, we will continue innovating to deliver unparalleled value and insights to the industry.”

Matthew Sheehan of Acorn Capital and a director of Padua Solutions said, “We believe that with its technology and data, Padua is poised to revolutionise the advice sector.  The acquisition of Wealth Data is a step to achieving this goal and we are excited to continue to support Padua’s ongoing growth and look forward to their continued success.”

This strategic acquisition underlines Padua’s commitment to continually raising the bar in financial advice through advanced technology, robust data solutions, and exceptional client support.

Mr Diamantes has over 19 years of experience in financial services and product and joins Padua from Colonial First State where was senior manager, IT regulatory obligations. Prior to this he was general manager – policy & regulation at Australian Retail Credit Association in 2023, and also held senior roles at AMP, Asteron Life, Zurich, and the Financial Planning Association.  Mr Diamantes started his career as technical services manager at Advance Asset Management in 2006.

He holds a Bachelor of Financial Administration from University of New England and is a certified financial planner (CPA). Mr Diamantes also has a Master of Laws from The Australian National University.

Mr Haddad says the appointment is a key move supporting Padua’s ongoing growth, and consolidates its position in the financial advice market.

“Dimitri’s strong technical background and regulatory expertise make him ideally positioned to lead the integration of our software,  and technical solutions. We look forward to Dimitri playing a key role in strengthening our offering to advisers and licensees as we continue to grow and evolve in a rapidly changing industry,” Mr Haddad says.

Matthew Esler

Padua Solutions, a leading innovator in financial advice technology and services, have announced a strategic partnership with Finchley & Kent, an agile and disruptive full-service AFSL. This new alliance enables Finchley & Kent advisers to access Padua’s cutting-edge technology and services, dramatically enhancing their capability to deliver timely, personalised, and compliant financial advice.

Under the partnership, Finchley & Kent’s network of advice firms will leverage Padua’s newly launched Paraplanning as a Service (PaaS) and Transition Management as a Service (TMaaS). These tech-enabled services provide seamless access to Padua’s full suite of advice technology, including the powerful Home, Discover, Compare & Recommend applications, delivering significant operational efficiencies and improved client experiences.

Matthew Esler, co-founder and CEO of Padua Solutions, said, “This partnership signifies an exciting step forward in supporting advisers to better manage their businesses and deliver exceptional client outcomes. Finchley & Kent’s fresh approach to advice aligns perfectly with our commitment to transforming financial advice through innovative, accessible technology.”

Finchley & Kent was established to challenge traditional advice industry norms and drive meaningful growth for advice firms through innovation and modern practices. Their commitment to agility and innovation makes them an ideal partner for Padua’s evolving suite of tech-driven advice solutions.”

Sam El Shammaa, said: “We’re thrilled to partner with Padua Solutions, whose forward-thinking technology solutions will empower our advisers to deliver more efficient, personalised, and scalable advice. Our collaboration underscores our shared vision to positively disrupt and reshape the future of financial services.”

Advisers within Finchley & Kent’s network will immediately benefit from reduced complexity and increased productivity, allowing them to spend more quality time with clients and less on administrative tasks.

This partnership underscores both companies’ shared commitment to innovation, adviser empowerment, and exceptional client service delivery.

Matthew Esler

Data is the new oil and has the potential to revolutionise the financial advice profession. It’s true value, however, can only be extracted by expert data management and a full understanding of its potential, according to Padua Solutions co-founder and co-CEO Matthew Esler.

Mr Esler says financial advisers can maximise value creation for their clients by boosting the use of data to achieve superior investment management decision-making and greater efficiencies.

“Data-driven decision-making is transforming investment strategies and platform choices in financial advice firms. By identifying and bridging data gaps and leveraging data insights, advisers can make more informed and effective decisions, maximising value for their clients.

“Advisers can harness the power of data to transform their advice firms and licensees to deliver superior outcomes,” Mr Esler said.

However, advice firms need to invest more in better data management of their existing customer relationship management (CRM) system.

Mr Esler says many advice firm CRMs, when doing a CRM Xray, look like Swiss cheese, filled with holes and operating inefficiently. This is one area where significant improvements can be made.

“Advisers often encounter incomplete information where critical details are missing. To bridge these gaps, firms need to prioritise comprehensive data collection and regular updates through reviews. Integrating the CRM with data validation sources can also help create a holistic view of the client’s financial situation,” Mr Esler said.

“By conducting a CRM diagnostic, for example, firms can identify and manage data gaps across their client base. A comprehensive understanding of the client’s existing position is essential for providing quality advice.”

Another important use of data is to provide more personalised advice, he said.

“Personalisation involves tailoring recommendations based on the client’s circumstances and preferences. This can be achieved by using data analytics to identify client-specific needs, goals, and risk tolerance. Personalised advice not only improves the relevance of the recommendations but also strengthens client relationships and trust,” Mr Esler said.

Advisers can also leverage data to enhance engagement with their clients. This can be done by providing clients with regular updates, insights, and reports based on their data.

“For instance, advisers can use data visualisation tools to present complex information in an easy-to-understand format, helping clients make informed decisions. Additionally, interactive tools and platforms that allow clients to explore their data and scenarios can increase their engagement and satisfaction,” Mr Esler says.

“Advisers should continuously educate themselves on the latest data trends, tools, and technologies. The field of data analytics is constantly evolving, and staying updated on the latest developments can help advisers leverage new opportunities and stay ahead of the competition.”

To help advice firms, Padua has developed the ‘Research Manager’ tool, a comprehensive database of over 900 platforms and 25,000 investments. “We use data validation and verification processes to ensure the accuracy and relevance of this research for our adviser network. This enables advisers to evaluate and recommend platforms and investment strategies based on a wide range of features and benefits tailored to their clients’ needs,” Me Esler said.

“We aggregate investment data too, on over 25,000 investments, from several different sources. The breadth and depth of this platform and investment data ensures that our client advice firms can evaluate and recommend platforms and investment strategies based on a wide range of features and benefits specific to the needs of their clients.”

Mr Esler noted that providing advisers with technical support has never been more important. To fill the void left by the exodus of technical services teams, Padua, under the direction of Rudy Haddad, recently released over 880 unique technical strategies and almost 2,000 variations into its Recommend software.

“We also offer unlimited access to all our software – Home, Discover, Compare, and Recommend – for any financial advisory firm using Padua’s advice generation services.  Each month we’re capturing data on what strategies advisers are recommending. We are also benchmarking this data at the adviser, firm and licensee levels. This data is also being used to determine the most popular recommendations, as well as understanding the strategies that aren’t being recommended and trying to work out why,” Mr Esler said.

“Continuous education on the latest data trends, tools, and technologies is crucial for staying ahead,” he concluded.

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Matthew Esler

Data is the new oil and has the potential to revolutionise the financial advice profession. It’s true value, however, can only be extracted by expert data management and a full understanding of its potential, according to Padua Solutions co-founder and co-CEO Matthew Esler.

Mr Esler says financial advisers can maximise value creation for their clients by boosting the use of data to achieve superior investment management decision-making and greater efficiencies.

“Data-driven decision-making is transforming investment strategies and platform choices in financial advice firms. By identifying and bridging data gaps and leveraging data insights, advisers can make more informed and effective decisions, maximising value for their clients.

“Advisers can harness the power of data to transform their advice firms and licensees to deliver superior outcomes,” Mr Esler said.

However, advice firms need to invest more in better data management of their existing customer relationship management (CRM) system.

Mr Esler says many advice firm CRMs, when doing a CRM Xray, look like Swiss cheese, filled with holes and operating inefficiently. This is one area where significant improvements can be made.

“Advisers often encounter incomplete information where critical details are missing. To bridge these gaps, firms need to prioritise comprehensive data collection and regular updates through reviews. Integrating the CRM with data validation sources can also help create a holistic view of the client’s financial situation,” Mr Esler said.

“By conducting a CRM diagnostic, for example, firms can identify and manage data gaps across their client base. A comprehensive understanding of the client’s existing position is essential for providing quality advice.”

Another important use of data is to provide more personalised advice, he said.

“Personalisation involves tailoring recommendations based on the client’s circumstances and preferences. This can be achieved by using data analytics to identify client-specific needs, goals, and risk tolerance. Personalised advice not only improves the relevance of the recommendations but also strengthens client relationships and trust,” Mr Esler said.

Advisers can also leverage data to enhance engagement with their clients. This can be done by providing clients with regular updates, insights, and reports based on their data.

“For instance, advisers can use data visualisation tools to present complex information in an easy-to-understand format, helping clients make informed decisions. Additionally, interactive tools and platforms that allow clients to explore their data and scenarios can increase their engagement and satisfaction,” Mr Esler says.

“Advisers should continuously educate themselves on the latest data trends, tools, and technologies. The field of data analytics is constantly evolving, and staying updated on the latest developments can help advisers leverage new opportunities and stay ahead of the competition.”

To help advice firms, Padua has developed the ‘Research Manager’ tool, a comprehensive database of over 900 platforms and 25,000 investments. “We use data validation and verification processes to ensure the accuracy and relevance of this research for our adviser network. This enables advisers to evaluate and recommend platforms and investment strategies based on a wide range of features and benefits tailored to their clients’ needs,” Me Esler said.

“We aggregate investment data too, on over 25,000 investments, from several different sources. The breadth and depth of this platform and investment data ensures that our client advice firms can evaluate and recommend platforms and investment strategies based on a wide range of features and benefits specific to the needs of their clients.”

Mr Esler noted that providing advisers with technical support has never been more important. To fill the void left by the exodus of technical services teams, Padua, under the direction of Rudy Haddad, recently released over 880 unique technical strategies and almost 2,000 variations into its Recommend software.

“We also offer unlimited access to all our software – Home, Discover, Compare, and Recommend – for any financial advisory firm using Padua’s advice generation services.  Each month we’re capturing data on what strategies advisers are recommending. We are also benchmarking this data at the adviser, firm and licensee levels. This data is also being used to determine the most popular recommendations, as well as understanding the strategies that aren’t being recommended and trying to work out why,” Mr Esler said.

“Continuous education on the latest data trends, tools, and technologies is crucial for staying ahead,” he concluded.

The post Time for financial advisers to leverage the new oil appeared first on AdviserVoice.

Benjamin Walsh

Introduction

In the world of investing, there is a long-standing debate between two strategies: timing the market and time in the market. Countless investors grapple with this dilemma. The conventional wisdom often echoes the importance of holding investments for the long term and riding out market downturns. However, recent research challenges this axiom, suggesting that time may not necessarily decrease investment risk. In this article, we will delve into the intricacies of these strategies and explore the potential risks and rewards associated with each approach.  The issue is compounded however by the failure in managing expectations, modelling, risk management, strategies, and the failure of advice to adequately personalise product to client needs from a benchmark perspective.  All of this is leading to reduced value in advice.

The allure of market timing

Market timing involves attempting to predict future market price movements and making buying or selling decisions accordingly. The goal is to buy low and sell high, capitalising on short-term market fluctuations. This strategy can be enticing, especially for experienced investors who believe they have a deep understanding of market dynamics. However, the reality is that consistently timing the market is notoriously difficult, even for the most seasoned professionals.

A study conducted on day traders found that over 70% of investors lose money in their first year of implementing market timing strategies. The few success stories of individuals who timed the market correctly are often celebrated, but these instances are rare and seldom repeated. Warren Buffett, one of the most successful investors of our time, famously stated, “The only value of stock forecasters is to make fortune-tellers look good.”

The case for time in the market

On the other hand, time in the market refers to a passive investment strategy where an investor holds a position for an extended period, usually several years or more. This approach focuses on the fundamentals of the asset itself and the belief that over the long term, the market will generally trend upward. Proponents of this strategy argue that patience and discipline are key to achieving significant portfolio gains.

Historical data supports the notion that the stock market has delivered impressive returns over the long term. The S&P 500 index, for example, has returned an average of 10% annually over the past century. By adopting a buy-and-hold approach, investors can potentially benefit from the power of compounding returns and mitigate the impact of short-term market volatility.

However, it is crucial to acknowledge that time in the market is not without its risks. A recent US study, based on 100,000 simulations using the Black-Scholes pricing model, sheds light on the potential downsides of this strategy. The study found that while the chances of losing money decrease with longer investment horizons, the worst-case scenario (i.e., the biggest loss) becomes progressively worse.

To illustrate this point, consider a hypothetical “risky” asset with a 10% annualised return and a 20% annualised volatility. The study’s simulations showed that over a 20-year investment horizon, the chances of generating a positive return increased significantly compared to shorter time frames. However, if an investor were to experience an unfortunate sequence of returns, the magnitude of the potential loss could be devastating.

Balancing risk and return

As investors, it is crucial to understand and manage the inherent risks associated with any investment strategy. Roger Ibbotson, a renowned finance professor, emphasises that the value derived from investment management comes from various components, not just asset allocation. This of course has huge ramifications for those that outsource their investment decision making, particularly when many of these Firms attest to the discredited view of Brinson around the value found in the asset allocation decision alone.  Advisors must be well-versed in all aspects of risk management to effectively guide their clients.

One of the challenges in the investment industry is the lack of proper risk disclosure and discussion. Linear retirement modelling and simple asset allocation based on risk profiles often fail to convey the true risks involved in portfolio recommendations. It also illustrates a failed product research process that revolves around historical returns and recency bias.  Access to accurate data and risk assessment tools is essential for advisors to communicate the potential downsides to their clients effectively.

Modelling is an essential tool in the investment management and advice process, enabling advisers and clients to make informed decisions based on data-driven insights.  Modelling plays a critical role in helping manage expectations between advisers and clients.

Linear deterministic models

Linear deterministic models are a type of financial model that assumes a linear relationship between variables and a fixed outcome. These models are often used to forecast future cash flows, investment returns, or other financial metrics. The primary advantage of linear deterministic models is their simplicity, as they require minimal data and computational resources. However, linear deterministic models also have significant limitations. They do not account for uncertainty or randomness in the financial markets, which can lead to inaccurate predictions and overconfidence in investment decisions. Additionally, linear deterministic models are sensitive to the assumptions used, meaning that small changes in input variables can result in significant changes in output. Despite these limitations, linear deterministic models can still be useful in certain situations. For example, they can be used to create a baseline scenario for investment planning, which can then be supplemented with more sophisticated models that account for uncertainty.

This approach is most used in Australia and the methodology along with the capital markets assumptions used are truly inadequate.  Justification for using this approach stems from a view that it’s all “garbage” anyway to consumers aren’t interested.  These arguments, like many in Australian advice have their beginnings in vertical integration and are championed by product creators who are not interested in critical assessment of a product.

Constrained Monte Carlo modelling using an upside and downside view

Constrained Monte Carlo modelling is a more advanced modelling technique that accounts for uncertainty. This approach involves simulating thousands of potential scenarios based on historical data (although synthetic and / or forecasted data can be used) and statistical distributions, allowing advisers and clients to better understand the range of possible outcomes. One way to implement constrained Monte Carlo modeling is by using an upside and downside view. This approach involves recognising that besides focusing on downside risk we need to be prepared to talk to the possible best-case outcomes. By considering both scenarios, advisers and clients can better understand the potential risks and rewards of an investment strategy for a given risk profile. Stress test outcomes are also another way to manage expectations.  The upside view is typically based on optimistic assumptions about market conditions, such as high economic growth and low interest rates. In contrast, the downside view is based on pessimistic assumptions, such as a recession or a market crash. By simulating both scenarios, advisers and clients can better understand the potential impact of market volatility on their investment portfolios. Constrained Monte Carlo modelling using an upside and downside view can be particularly useful in managing expectations between advisers and clients. By presenting both the best-case and worst-case scenarios, advisers can help clients understand the potential risks and rewards of an investment strategy. This can lead to more informed decision-making and a better alignment of expectations between advisers and clients.

Constraining a Monte Carlo simulation can be achieved in many ways beyond changing assumptions.  Using assorted risk metrics as a constraint the advisor and client can enjoy the benefit of only considering more probable outcomes.

Strategy considerations

Often people talk to annuities as a solution for this risk however annuities are typically funded at a single point in time, which means that if the market experiences a downturn shortly after the annuity is purchased, the client’s retirement income could be significantly reduced. This risk is particularly high during the last 10 years of an investor’s accumulation phase and the first 10 years in retirement, as the sequence of returns during this period has a significant impact on the sustainability of the retirement income.

The debate between time in the market, timing the market, and sequencing risk is a complex one, and the structure of a portfolio made up of various investment options can add to this complexity. In the case of pooled investment vehicles, each with its own benchmark and investment objectives, changes over time can indeed defeat the concept of buy and hold. This is because the investment objectives and benchmarks of the underlying investments may no longer align with the original investment goals of the portfolio, potentially leading to suboptimal performance.

Moreover, the portfolio itself may have a growth and defensive asset exposure that matches the risk profile of the client, but the benchmarks and investment objectives of the products may not. This can create a mismatch between the client’s risk tolerance and the actual risk exposure of the portfolio, leading to potential losses during market downturns. This is particularly relevant in the context of sequencing risk, which refers to the risk that the order of investment returns can significantly impact the long-term sustainability of a portfolio, especially during the early years of retirement. To address these challenges, it is crucial for investors and financial advisers to regularly review and reassess the investment objectives and benchmarks of the underlying investments in the portfolio. This can help ensure that the portfolio remains aligned with the client’s risk tolerance and investment goals, even as market conditions and investment objectives change over time.

Assigning a strategic benchmark to a client’s portfolio makes a great deal of sense in managing this risk.  Strategic benchmarks are essential tools for driving performance, growth and managing expectations. They provide a clear frame of reference for evaluating performance and guiding decision-making. In the context of portfolio management, strategic benchmarks are used to measure the performance of an investment portfolio against a standard or reference point. This enables investors and managers to make informed decisions, identify areas of strength and weakness, and foster accountability. There are various types of strategic benchmarks, including market benchmarks, custom benchmarks, absolute return benchmarks, peer group benchmarks, and risk-adjusted benchmarks. Each has its unique benefits and limitations, and the selection of the appropriate benchmark depends on various factors such as alignment with investment objectives, time horizon, risk tolerance, and asset allocation.

For example, a market benchmark such as the S&P 500 index can be used to measure the performance of a portfolio that invests in large-cap U.S. equities. This type of benchmark provides a broad representation of the market and enables investors to compare the performance of their portfolio against the overall market. However, it may not be suitable for portfolios that invest in other asset classes or have different investment objectives.

Custom benchmarks, on the other hand, are tailored to the specific needs of the portfolio. They can be created by combining different indices or by using factors that are relevant to the portfolio’s investment strategy. For example, a custom benchmark can be created for a portfolio that invests in small-cap stocks by using the Russell 2000 Index as a starting point and adjusting based on the portfolio’s specific characteristics.

Absolute return benchmarks measure the performance of a portfolio against a fixed target return, such as inflation plus 3%. This type of benchmark is useful for portfolios that have specific return targets or that invest in alternative asset classes that are not well represented by traditional market indices.

Peer group benchmarks compare the performance of a portfolio against a group of similar portfolios. This type of benchmark enables investors to compare the performance of their portfolio against other portfolios with similar investment objectives and strategies.

Risk-adjusted benchmarks consider the level of risk taken to achieve a certain level of return. This type of benchmark is useful for investors who are concerned about the risk-return trade-off and want to ensure that their portfolio is aligned with their risk tolerance.

In addition to selecting the appropriate benchmark, it is important to implement best practises such as regular benchmark review and updates, incorporating multiple benchmarks, aligning benchmarks with stakeholder expectations, and balancing benchmarking with innovation. Regular benchmark review and updates ensure that the benchmark remains relevant and aligned with the investment objectives. Incorporating multiple benchmarks can provide a more comprehensive view of the portfolio’s performance and help identify areas for improvement. Aligning benchmarks with stakeholder expectations ensures that the benchmark is meaningful and relevant to the stakeholders. Balancing benchmarking with innovation allows for flexibility and adaptability in response to changing market conditions and investment opportunities.  Whilst still maintaining exposure to the market.

The value of custom and direct indexing can be seen in this space as it is the only option that reflects the personalisation that is required for advice to truly meet its fiduciary duties.  Other solutions are too broad.

Conclusion

The debate between timing the market and time in the market is likely to persist, as investors continue to seek the most effective strategies for long-term wealth creation. While the allure of market timing may be tempting, the evidence suggests that it is a challenging and often unsuccessful endeavour. On the other hand, adopting a long-term investment approach, while not without risks, has historically proven to be a more reliable path to financial success.

At this point I could say that diversification (fails due to correlation problems in reality), bucket strategy (simplistic personalisation attempt that fails to solve all the issues) and dynamic withdrawal strategies (the horse has already bolted).  Tontines, longevity insurance and flexible annuities are all other products but again they all help but none address the personalisation issue and have unique issues in themselves.

Advice does not consider risk properly nor does a statement of advice articulate an investment policy statement both are aspects missing that will help manage the issues outlined.

Ultimately, the key to successful long-term investing lies in understanding the trade-offs between risk and return, maintaining a long-term perspective, and having the patience to weather short-term market fluctuations. By embracing these principles and working with trusted professionals, investors can position themselves for financial success and achieve their long-term investment objectives.

By Benjamin Walsh, head of research, Padua Solutions

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References:
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– https://www.firstlinks.com.au/balancing-longevity-and-sequencing-risk

In the new role, Ms Cirjak is the lead point of contact on all key account matters, building strategic partnerships with existing clients as well as developing solutions within Padua’s existing client base.  She reports to co-founder and co-CEO, Matthew Esler.

Ms Cirjak joins Padua from Scale Up Paraplanning where she spent almost two years in client facing and business development roles. Prior to this she held management positions at Bindon-Howell & Associates and Milestone Financial Services. She has also worked as a paraplanner at Barnett Lilley & Associates and a publishing editor at the Department of Defence.

Mr Esler believes that Ms Cirjak’s storied history working in the financial services industry will be invaluable when building relationships with Padua’s existing key account clients.

“Katie has almost two decades of experience in various leadership and management roles working for previous financial service businesses.  With Katie’s penchant for all things AI and technology, I am confident she will make a great difference to those tech-enabled advice firms using Padua’s advice generation services. 

Katie is highly regarded within the financial services industry and maintains excellent relationships with advisers and their support staff. With extensive experience in client account management, project management, and technological advancements across financial planning firms, she is a valuable addition to our team.

“Katie’s drive for innovative technology solutions and building strong relationships aligns with Padua’s own goals,” Mr Esler says.

Matthew Esler

Financial technology firm Padua predicts the corporate regulator ASIC could eventually use artificial intelligence (AI) in its compliance and audit checks of financial advisers as the use of AI applications rapidly expands in the financial advice industry.

“Potentially, down the track, we think AI could be used to check if advisory firms are meeting regulatory requirements and to check for compliance in advice documents, and in other supporting materials such as file notes,” said Padua’s co-CEO, Matthew Esler.

“As it stands, AI is increasingly being used in advice firms around Australia and each stage of the financial advice process, although particularly in data collection, and is likely to be impacted by emerging AI applications. Many advisers are now using natural language AI in their day-to-day operations. Within the advice process, AI can also be used to record minutes of meetings and in the creation of fact find information and file notes.”

Mr Esler says important considerations for advisers include that AI-generated file notes and fact find information comply with Australian regulations and laws.

“There’s a real risk for financial advice firms inadvertently providing recommendations in the information gathering stage which would necessitate an advice document with five days.

“We expect ASIC will be monitoring this. Firms too will have to manage their use of AI through a combination of robust technical measures, comprehensive understanding of the regulatory environment and continuous oversight.”

According to Mr Esler, large language models (LLMs) can perform routine data analytics to ensure the validity of client datasets during the advice process to ensure the ‘client story’ is viable and consistent throughout the entire advice process.  This can save advisers significant time in checking and correcting client data.

“Within investment management, AI can be used for portfolio optimisation by analysing data and developing portfolios that maximise risk-adjusted returns, as well as to helping to execute trades automatically based on pre-defined strategies or parameters.

“There is some great automation and optimisation technology which will assist financial advisers in matching the best advice strategy recommendations to the client’s goals and objectives. Padua Recommend technology is leading the industry on this front but there will no doubt be other competitors coming into the market to develop AI applications for financial advice,” Mr Esler said.

Padua’s tools, for example, can help advisers to produce records of advice (RoAs), statements of advice (SoAs), product comparisons and best interests duty (BID) statements within minutes.

“We are revolutionising how financial advice is delivered. We can compare the fees and features over 900 superannuation, pension and investment platforms as well as over 25,000 investment options using the Padua Compare tool. Our software streamlines compliance and workflow management, creating huge efficiencies and further reducing costs for advisers,” Mr Esler said.

“Progress is being made across so many different channels. Our research team uses AI within their primary and secondary research functions but also in automating data collection and analytics.  We are also evaluating AI avatar video presentation capability for advisers to present advice via video to clients, and Padua is currently testing this option,” Mr Esler said.

“However, scrutiny is essential. As some licensees have already experienced, AI does not come without its risks with comments made by advisers during this process recorded, and the potential for advice to be provided in these meetings, requires caution. There’s also the concern around  ‘deep fakes’ – impersonating another person using AI, with fraud a major challenge for advisers, and every person online.”

He says in order to overcome challenges, it is important the advice firm have a plan and consider protection considerations which should be given to implement robust data security and privacy measures, following best practices and regulatory guidelines.

“Firms should establish clear AI governance frameworks, ethical principles, and risk management strategies and invest in training and upskilling employees to build AI capabilities or collaborating with experts in the space,” says Mr Esler.

Globally, he pointed to NVIDIA’s fourth annual State of AI in Financial Services Report  which provided recent insights into emerging trends in the global financial services sector.

“The report reveals that 91 per cent of financial services companies globally are either assessing AI or already using it in production.

“These firms are using AI to drive innovation, improve operational efficiency and enhance customer experiences.”

That data comes from a global survey of over 400 financial services professionals from around the world. Mr Esler noted these firms are using AI to drive innovation, improve operational efficiency and enhance customer experiences.

Matthew Esler

Removing lengthy Statement of Advice (SoA) documents does not mean that advisers no longer need to produce a financial plan and regularly review that plan, according to co-chief executive and co-founder of fintech Padua Solutions, Matthew Esler.

“Much of the industry were wrongly suggesting the removal of the SOA or ROA meant you weren’t required to produce the financial plan or review. They have now realised that getting rid of an SoA doesn’t mean that you’re getting rid of the financial plan or you’re getting rid of the review. We are moving away from the safe harbour steps but we are still going to have best interest, and we’re now also going to have the good advice requirement,” he said.

SoAs and RoAs are set to be removed as part of the Quality of Advice review recommendations accepted by the Federal Government.

Although new documents are expected to be less prescriptive, Mr Esler said it will now be in advisers’ best interests to outline to clients how they are creating value through various technical strategies suggested.

“If you look at how much time it takes to produce advice at the moment, I don’t think a lot of that time is going to disappear by getting rid of the SoA document. When a client meets with a financial planner, they are going to expect a financial plan. You are going to need to highlight their existing situation, the benefits of the recommendations, the cost of that advice and the value your plan will create.

“As fiduciaries, it’s really important to highlight to the client what their existing situation looks like and where they are headed. Then, based on the recommendation, this is how much closer they will be towards achieving those goals,” he said.

Financial advice technology solutions are going to be a key part of helping advisers in this process. Mr Esler said up until now, the technology in the market struggled to provide different scenarios that advisers can present to clients in an engaging way.

“We’re starting to see a heavy shift in focus toward technical strategy, largely as a result of the compliance environment becoming more certain, which is leading to more advisers engaging approach in the provision of advice,” he said.

Mr Esler is concerned that because of the myriad of pressures on the rapidly shrinking number of financial planners in Australia, they have not been able to provide the best technical strategies to clients.

“The technical strategies we employed in the early 2000s were far broader than the technical strategies being employed today.

“That means that advisers are potentially leaving benefits – concessions, rebates, deductions, offsets and the like – off the table, which means the benefit that’s being afforded to the client has been lowered,” he said. High-quality technical strategy creates tax and other benefits for clients that are “certain” over and above the uncertain returns through investments.

Advisers need financial advice technology that provide them guidance on the maximum quantifiable benefits of implementing those strategies so they can discuss them subjectively with clients based on the needs and objectives.

“Being able to show what the maximum quantifiable benefit of each strategy is, is incredibly powerful, and something that has never existed in the industry, but with advancements in tech, it’s something that is going to exist in the industry in the near future,” he said.